Monday, 23 April 2012

Political developments will determine the course of the debt crisis, although the news over the weekend on this aspect only added more uncertainties.

In France, incumbent Nicolas Sarkozy has not done well in the presidential elections. Reuters reports:

Far-right voters may decide who becomes France's next president after anti-immigration crusader Marine Le Pen's record first-round score jolted the race between Socialist frontrunner Francois Hollande and incumbent Nicolas Sarkozy.

The centre-left Hollande narrowly beat the conservative Sarkozy in Sunday's 10-candidate first round by 28.6 percent to 27.1 percent, the Interior Ministry said with 99 percent of votes counted, but Le Pen stole the show by surging to 18.0 percent, the biggest result for a far-right candidate...

If Hollande wins, joining a small minority of left-wing governments in Europe, he has promised to renegotiate a European budget discipline treaty signed by Sarkozy. That could presage tension with German Chancellor Angela Merkel, who made the pact a condition for further assistance to troubled euro zone states.

Meanwhile, another core eurozone member, the Netherlands, is facing the prospects of elections after the government failed to agree on budget cuts. Reuters reports:

Prime Minister Mark Rutte, whose centre-right coalition has been in power since October 2010, said on Saturday that crucial talks on budget cuts had collapsed after his ally Geert Wilders refused to do a deal, and that new elections were inevitable.